Cheque Issued To Return Bribe Amount Not A Legally Enforceable Debt; S.138 NI Act Not Attracted: Madras High Court
Isabella Mariam
The Madras High Court at Madurai, Single Bench of Justice K. Murali Shankar held that a cheque issued to return money paid for securing public employment does not create a legally enforceable debt and therefore cannot sustain prosecution under Section 138 of the Negotiable Instruments Act. The dispute arose from allegations that the accused accepted a payment to arrange a job and later issued a cheque when the employment did not materialise. The Court observed that such an arrangement is void from inception under Section 23 of the Indian Contract Act and falls outside the scope of recoverable liabilities. Consequently, the Court upheld the acquittal of the accused and dismissed the appeal.
The matter concerns a criminal appeal filed by the complainant challenging the acquittal of the accused under Section 138 of the Negotiable Instruments Act. The complainant alleged that the accused, who was working in the mechanical section of the Tamil Nadu State Transport Corporation (TNSTC) at Virudhunagar, had demanded ₹3 lakhs by claiming he could arrange a conductor post for the complainant through his influence in the Labour Union. The complainant stated that the amount was paid on 10.02.2016 in the presence of one Madamuthu.
According to the complainant, the accused failed to secure the promised employment, and upon repeated demands, issued a cheque dated 31.12.2016 drawn on the State Bank of India, Aruppukkottai Branch. The complainant alleged that when this cheque was presented on 02.01.2017, bank officials informed him that the cheque was old and invalid. Thereafter, the accused allegedly issued a second cheque dated 28.02.2017 for ₹3 lakhs drawn on SBI Virudhunagar Branch.
The complainant stated that when the second cheque was presented, it was returned unpaid due to insufficient funds. A legal notice dated 14.03.2017 was issued, received by the accused on 20.03.2017, to which no reply was given. A private complaint under Section 200 CrPC was thereafter filed for the alleged offence under Section 138 read with Section 142 of the NI Act.
During trial, the complainant examined himself as P.W.1 and examined Madamuthu as P.W.2, producing Exhibits P-1 to P-5. The accused denied the allegations during the examination under Section 313(1)(b) CrPC and did not produce defence evidence. The trial court held that the cheque was not issued towards a legally enforceable debt and acquitted the accused. The appeal was filed challenging this finding.
The Court recorded that the complainant had “specifically stated that he gave Rs.3 lakhs to the accused for getting conductor job in TNSTC” and that P.W.1 and P.W.2 “would reiterate the very same version that the amount of Rs.3 lakhs was given to the accused for securing a job.” The Court noted that such payment would be “considered a bribe and is opposed to public policy.”
It referred to the legal maxim “in pari delicto potior est conditio possidentis,” explaining that it means “in equal fault, the condition of the possessor is better.” The Court recorded that the maxim prevents courts from assisting parties who are “equally at fault or equally favour for an immoral act.”
The Court extracted Section 23 of the Indian Contract Act, stating that an agreement is unlawful if “the Court regards it as immoral, or opposed to public policy.” It stated illustration (f) under Section 23, which reads: “A promises to obtain for B an employment in the public service and B promises to pay 1,000 rupees to A. The agreement is void, as the consideration for it is unlawful.”
The Court observed that “the agreement between the complainant and the accused is to be considered as void, as the consideration of Rs.3 lakhs was in the nature of an illegal gratification and was unlawful.”
It examined Section 65 of the Contract Act and stated that it applies only when an agreement is later discovered to be void, not when it is “void ab initio, that is, void from the very beginning.” The Court recorded that in the present case, the agreement “is opposed to public policy, rendering it void ab initio.”
It further stated that “since the complainant's case is based on a specific claim that the money was given for securing a TNSTC job and the cheque was issued to repay this amount, this Court holds that there is no legally enforceable debt or liability.” The Court found no error in the trial court's findings and stated that “Section 138 of the NI Act is not applicable.”
The Court directed that “the impugned judgment acquitting the accused is perfectly legal and deserves no interference. The appeal is devoid of merits and is liable to be dismissed. In the result, this Criminal Appeal is dismissed.”
Advocates Representing The Parties
For the Appellant: Mrs. M. Mariya Vinola
For the Respondents: Mr. K. Sudalaiyandi; Mr. B. Thanga Aravindh, Government Advocate
Case Title: P. Kulanthaisamy v. K. Murugan & Another
Case Number: Crl.A.(MD)No.758 of 2022
Bench: Justice K. Murali Shankar
